Correlation Between Grupo Elektra and Citigroup

Can any of the company-specific risk be diversified away by investing in both Grupo Elektra and Citigroup at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Grupo Elektra and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grupo Elektra SAB and Citigroup, you can compare the effects of market volatilities on Grupo Elektra and Citigroup and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Grupo Elektra with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Elektra and Citigroup.

Diversification Opportunities for Grupo Elektra and Citigroup

-0.67

Correlation Coefficient

Grupo Elektra  Citigroup

Excellent diversification

The 3 months correlation between Grupo and Citigroup is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Elektra SAB and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Grupo Elektra is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Grupo Elektra SAB are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Grupo Elektra i.e., Grupo Elektra and Citigroup go up and down completely randomly.

Pair Corralation between Grupo Elektra and Citigroup

Assuming the 90 days trading horizon Grupo Elektra SAB is expected to under-perform the Citigroup. In addition to that, Grupo Elektra is 2.95 times more volatile than Citigroup. It trades about -0.44 of its total potential returns per unit of risk. Citigroup is currently generating about 0.12 per unit of volatility. If you would invest  143,233  in Citigroup on October 13, 2024 and sell it today you would earn a total of  4,767  from holding Citigroup or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Grupo Elektra SAB  vs.  Citigroup

Grupo Elektra SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Elektra SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Citigroup showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Elektra and Citigroup

The main advantage of trading using opposite Grupo Elektra and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Elektra position performs unexpectedly, Citigroup can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Citigroup will offset losses from the drop in Citigroup's long position.

The idea behind Grupo Elektra SAB and Citigroup pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.